HSC transplantations have become a standard of care for treating otherwise incurable blood cancers and genetic diseases. The curing of HIV and leukemia by transplanting HSCs from HIV-resistant patients with a CCR5-D32 mutation has demonstrated the power of stem cell-based therapies for AIDS. However, difficulties in the genetic modifications of autologous HSCs and in finding HLA-compatible CCR5-D32 donors significantly hamper the widespread use of somatic HSC-based AIDS therapies in the clinical setting. Converting adult human cells to induced pluripotent stem cells (iPSCs) provides a unique opportunity to produce immunologically matched gene-edited therapeutic cells for diseases of the blood and immune system as iPSCs can be expanded indefinitely ex vivo, genetically modified using homologous recombination and differentiated into hematopoietic cells. However, transferring this approach to the clinic requires the improvement of iPSC- derived blood cell engraftment, development of robust cGMP-compatible protocols for blood production from iPSCs, and the bi-allelic CCR5 disruption to provide an anti-HIV effect. The proposed studies capitalize on our recent advances in identification of pre-HSC hemogenic endothelium (HE) stage in human ESC/iPSC cultures and progress in locus-specific gene editing in ESC/iPSCs using ZNF-mediated homologous recombination. The three related specific aims are directed at understanding the molecular mechanisms controlling development of HSCs from human PSCs through the HE stage, with the ultimate goal to develop clinically- relevant protocols for ex vivo production of CCR5-knockout autologous HSCs for AIDS therapies. In aim 1, we will identify the biological regulators guiding the formation of engraftabl hematopoietic cells from HE with a goal to improve production of blood cells with regenerative potential from human PSCs. In aim 2, we will develop homologous recombination-based technology for the bi-allelic CCR5 knockout in iPSCs and test the engraftability and safety of genetically corrected iPSC-derived blood cells following transplantation in NOD/SCD/IL2Rg-/- (NSG) mice. In aim 3, we will test whether iPSC-derived CCR5-null cells are protected from HIV-1 challenge in NSG mice. Successful completion of the studies will validate a methodology for generation of regenerative blood cells from iPSCs and their potential use for HIV therapies. The applications of the methodology proposed here will be also useful for basic research and for future clinical applications for modification of any genomic target in iPSCs.